Editorial: Florida right to ‘freeze’ insurance

Wednesday

Oct 24, 2018 at 2:01 AM

The Property Casualty Insurers Association of America estimates insurance losses from Hurricane Michael will range from $2 billion to $4.5 billion. The huge disparity between the high and low number simply reinforces the scope of loss and the breadth and depth of the damage.

The destruction of Michael is so widespread, we can’t yet estimate the losses, let alone cope with them or begin an organized effort to fix them. That could take years.

Florida is directing an unprecedented push at bringing in outside aid, be it military, state law enforcement or utility companies from across the Southeast.

The effort is especially difficult because the help we might usually expect from neighboring states is hampered by the unprecedented damage to our neighbors to the north. Their resources are insufficient to handle the trail of destruction Michael left, as the stubborn storm wrecked a wide swath of Georgia and Alabama — still as a hurricane. It later set records for damage on its romp up the southeastern states as a powerful tropical storm. At the same time, the Carolinas are still wrestling with the aftermath of Hurricane Florence last month.

Against that disastrous backdrop, Florida, to its credit, has put into place a freeze on any property insurance hikes for 90 days. Insurance Commissioner David Altmaier has also locked down any non-renewals or cancellations issued in the days prior to Michael in order to allow policyholders more time to find other coverage.

Meanwhile, analysts say Florida’s losses will be easily covered by its insurers. That, we’re told, is because we have a kind of patchwork kind of coverage, predominately by smaller insurers. So, losses to these companies will be less damaging than to larger underwriters. Florida also has Citizens Property, a state-created insurer of last resort.

Liberty Mutual, Allstate and State Farm write few, if any policies, in Florida. They began bailing out following Hurricane Andrew in 1992. Estimates say national insurance companies write only 20 percent of Florida policies today.

A group of about 50 smaller companies own the market here, and analysts assure us they’re all required to carry reinsurance policies in order to do business here. What that means is the liability is spread out and well-covered.

To demonstrate the difficulty of estimating Michael’s damage, a Boston-based company that models catastrophes estimates Florida’s private insurers will pay out $6 billion to customers. While it is a hefty price tag, it could have been much worse. Because of the relatively sparse population of Northwest Florida, covering the losses appears to be manageable.

The destruction was calamitous in those areas hardest hit, Panama City and Mexico Beach, for example. Yet, even at the highest estimate in Florida of $6 billion, it’s interesting to recall Hurricane Irma caused $50 billion in Florida last year.

But it should be noted that the $6 billion figure is for private policies. The National Flood Insurance losses are not included in that total. It’s estimated it has 60,000 policies in Florida’s hardest-hit counties.

It’s all a good start, for a huge effort — at a heartbreaking event.

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